In one of our previous articles, we made a distinction between Corporate and Business Strategy. They define how a firm competes in the present.
However, Strategy is not just about competing for today, it is also about competing for tomorrow. When we talk about the future, strategy becomes a dynamic concept, which allows top managers to define goals and objectives for the future and outline how these goals and objectives will be achieved.
A great way to formalize a company’s purposes, goals, and values is to have formal mission and vision statements.
Both of these are related to the main reason а company exists, and help stakeholders understand and keep that reason in mind.
So, the Mission statement addresses the question “Why do we exist?” or “What is the fundamental reason for our organization’s existence?”
And the Vision statement, describes the desired future position of the company and answers the questions “What do we want to achieve in the future?” and “Who do we want to become?”
When trying to define the Vision statement we should include specific goals and objectives. Goals help companies define what they want to achieve, while objectives are the specific actions and measures for attaining these goals. By setting goals, managers commit themselves to a concrete course of action that would allow them to accomplish the company’s Vision. Goals can target different areas like growth, profitability, retention, efficiency, or customer service. In most cases goals are expressed as a percentage. For example, when considering financials, a company’s goal could be to increase revenue and decrease overheads, which is stated in the following way. “Increase revenue by 10% and decrease overheads by 5% in 2017.”
An example of an objective that will help you achieve a 10% increase of sales is acquiring 5 new customers every month.
Reducing overheads can be achieved by finding new and less expensive office premises or maybe outsourcing some activities. Both of these are specific objectives that can potentially allow a firm to reduce its overhead by 5%.
Another important question companies should answer is:
“How are we going to behave and what do we believe in?”
Maximizing profit is important, but it is also important to withhold certain values and principles. This is why most organizations have a set of values they stay behind. The role of this statement is to define the firm’s values and place constraints on the means by which the organization pursues its goals. This can be quite important for the talented individuals who are being recruited by the company. In most cases, they are not only interested in large compensation packages, but also want to work for an employer that is socially responsible and believes in integrity and business ethics.
Obviously, it is not hard to find a firm’s mission, vision, and values. All stakeholders are able to access these statements quite easily. Just open a company’s website and click around a bit – you will be able to locate them in no time.
It’s time for a few practical examples. Let’s consider how some large corporations have stated their Mission, Vision and Values Statements.
Some firms are very specific when defining their mission statements and clearly express why the firm exists and what kind of services it offers:
“To build the Web’s most convenient, secure, cost-effective payment solution“, PayPal;
To build the Web’s most convenient, secure, cost-effective payment solution“PayPal
“To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible”Tesla
These are the missions of PayPal and Tesla. Both companies have a mission statement that is laser focused. A statement that isn’t ambiguous and is to the point, and that indicates what the company’s main purpose is. But that’s not always the case. The mission statements of other companies show the type of Business Strategy their organization follows. Walmart and Ikea follow a Cost Leadership Business Strategy.
“We save people money so they can live better”Walmart
“At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”
There is a third type of Mission statements as well that is quite polar to what we’ve seen so far. Some companies are too vague in their Mission statements and do not present the market scope of the business.
“To be a company that inspires and fulfills your curiosity”Sony
“It is our mission to continue to authoritatively provide access to diverse services to stay relevant in tomorrow’s world.”Guess
Not very clear, right?
The same type of reasoning applies to selecting the Vision statement as well: it needs to express what the company wants to achieve. The best Vision statements are concise, clear and inspirational.
Here are examples of clear and memorable Vision statements:
“To provide access to the world’s information in one click.”Google
“To create economic opportunity for every member of the global workforce.”LinkedIn
And here is an example of a Vision statement which is too general and hard to remember.
“Our vision serves as the framework for our Roadmap and guides every aspect of our business by describing what we need to accomplish in order to continue achieving sustainable, quality growth.”,Coca-Cola
Okay, that covers Mission and Vision statements. Now values.
Let’s look at the values of Facebook. These are the guiding principles for the company’s employees. The company values impactful, dynamic, bold, open and socially responsible behaviour. These are the five values that Facebook and its employees should stand for. Defining these principles helps the company communicate to its employees what the organization stays behind and how it intends to do business.
It is pretty interesting to see how different companies understand the world, how they want to behave in it, and what do they want to achieve. This is what we can learn by reading a firm’s Mission, Vision and Values statements.